ComScore: Google Paid Clicks “Accelerate” in April

By Tiernan Ray

A bunch of analysts this morning are upbeat about a 20% increase in paid clicks for Google (GOOG) in April, according to data released by Web measurement firm ComScore (SCOR) after market close yesterday. Susquehanna Financial Group’s Marianne Wolk this morning raised her price target on Google from $600 to $635, saying that the company’s growth in paid clicks (a measure of keyword search advertising) is “accelerating.” Wolk says that ComScore accurately predicted a slowdown in Google’s paid clicks back in February, and she thinks the Web measurement firm is “directionally correct” in suggesting a pickup in the second quarter from the first quarter. Thomas Weisel’s Christa Quarles notes that ComScore has added to its report the rate of growth of total clicks, paid or unpaid, on Google, to compensate for past controversy over how to properly measure Google’s growth as it reduces ad coverage on some paes. Total clicks at Google rose 28% in April, according to the ComScore data. While Google’s paid clicks rose 20% year-over-year, they were down 2.5% from March, according to the report. Weisel’s Quarles says Google is using the recent decline in search share at Yahoo! (YHOO) and Microsoft (MSFT) as an opportunity to focus on quality versus quantity, by reducing the number of ads overall. She thinks this is a good thing, and maintains an “Overweight” rating on Google stock and a $745 price target. Note that ComScore data includes only clicks in the US, which leaves out a lot of Google, including international paid clicks and ads shown on other Web sites.

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There are 7 comments

MAY 29, 2008 10:53 A.M.

Dror Levy wrote:

Not so far the day that google will be 1000$ A share
with hope
Levy

MAY 29, 2008 11:18 A.M.

Floristclub.com clicks wrote:

Google is still a great buy at these levels. I'd say they are the technology version of Berkshire. We use Google ads for our company Floristclub.com and our sales increased amazingly. We believe GOOG will surpass 750 before the end of the summer.

MAY 29, 2008 12:00 P.M.

dig wrote:

they own paid clicks but where is the growth going to come from when there's no competition?

MAY 29, 2008 1:54 P.M.

dogdays wrote:

What are you people smoking?
Google is a current press darling but watch for more news from the Evil Empire of Microsoft. They are NOT giving up on this fight with the gagagoos of the Valley.

MAY 29, 2008 2:17 P.M.

Jimbo wrote:

Dig: Higher Prices.

MAY 29, 2008 4:19 P.M.

plagiarism and platitudes wrote:

As an MSFT stakeholder, I like it when MSFT stumbles, it makes them reflect and ask all the right questions.
What are you people drinking?
Google is a current press darling but watch for more news from the Evil Empire of Microsoft. They are NOT giving up on this fight.

MAY 29, 2008 5:32 P.M.

Tex wrote:

The trends toward the population accessing the net, the use of the net as an information tool including information on purchase decisions, and the use of non-cash transactions all seem to favor growth in both online commerce, and in commerce anywhere that's informed by online data and online advertising. Assuming Google uses its data on consumer and vendor behavior and expectations to stay in the right place as the market matures, growth in the market as a whole should provide adequate opportunity for growth. You don't need a bigger fraction of the pie to get enough more pie, if the pie is growing enough.

I don't think MSFT gets it, still. MSFT rocked when the game was about crippling customers' ability to change vendors (API lock-in of apps, file-format lock-in of customer data, etc.), but have a look at MSFT's falling browser share and MSFT's failure to control major mechanisms of data interchange that are predominant in networks, and it's clear MSFT hasn't got this one figured out.

What is MSFT offering folks in search that distinguishes it from competition? If the answer is "cash back" I wouldn't want to be in MSFT's position: low margins are a game for volume leaders and for the lowest-cost producer, and MSFT isn't a volume leader or the low-cost producer. In revenue from ads, GOOG seems to have it together. GOOG's efforts to offer alternate revenue streams may not amount to much additional revenue so far, but at minimum they offer some reason that (a) folks might stay with GOOG properties and be exposed to more opportunities to click links toward GOOG's bottom line, or (b) competition with MSFT's high-margin products with free alternatives may slowly drive down MSFT's high margins on the product categories in which MSFT has its highest margins (prepaid software licenses for operating systems and applications to generate, view, or store content).

Whether GOOG is a "deal" at current prices I'll not speculate, but it's definitely the horse to back in this competition. MSFT can't innovate its way to the top and its effort to buy its way there is frankly doomed. MSFT may have many years left to milk OS and Office franchises for cash, and it should stick to this type of area, where it's got expertise.

Anyone really think games or music players is really going to move the needle at MSFT?

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.